Its Ok if I don't know what a hedge fund is but this is hard to believe.
Bank of Italy says it thought LTCM was a long-term investment fund.
October 2, 1998: 11:16 am. ET
LONDON (Reuters) - A Bank of Italy agency said Friday it was unaware that Long-Term Capital Management was a hedge fund when it first put money in the fund.
"As far as we knew it was not a hedge fund, it was a long-term investment fund," said Pierantonio Ciampicali, director of the Italian Exchange Office, which revealed Thursday it had invested $250 million in the stricken fund.
Hedge funds are speculative funds, known for their aggressive trading tactics and their highly leveraged market bets. Banks have injected more than $3.5 billion in LTCM to keep it afloat after it incurred heavy losses due to volatile markets.
Ciampicali, accompanying Bank of Italy governor Antonio Fazio, made the comments at a conference in London. Immediately after Ciampicali spoke, Fazio appeared next to him, pulled him away and told him not to speak to the press on the LTCM affair.
Earlier Friday, Fazio was bombarded by questions over the investment but said he had nothing to say. After addressing Italian bankers and executives at the Savoy Hotel, Fazio was asked whether it was normal for a central bank agency to invest in a hedge fund and whether he would resign over the issue.
"I have nothing to say -- you're not going to get anything from me," Fazio said.
In addition to his role as head of the Bank of Italy, Fazio is president of the Italian Exchange Office.
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